Institutional Custody Staking: BitGo and P2P.org

<p><em>Seven Months Into 2026: What's Actually Driving Solana's Institutional Momentum</em><br><br>For institutional allocators, validator diligence, and treasury &amp; risk teams</p><h2 id="tldr">TL;DR</h2><p>• No network-wide outages in Q2, and Alpenglow's move to live testing puts sub-second finality within reach of mainnet.</p><p>• Institutional adoption is happening: MoneyGram is now a validator, Baillie Gifford issued a tokenized fund on Solana, and Open USD, a 140+ member consortium including Visa, Mastercard, and BlackRock, chose Solana for native issuance.</p><p>• The validator set thinned from about 774 to about 713 as the Foundation wound down delegation subsidies, while network gross rewards declined from about 6.6 % to about 6.1 %.</p><p>• All three P2P.org public validators beat the network skip rate every month of Q2, with rewards reported down to the individual stake account.</p><p>• The remaining blocker for institutional capital isn't the chain. It's internal -&nbsp; data an allocator can defend to a risk committee, investment mandates that haven't caught up, and where DeFi fits inside a compliance boundary.</p><hr><p><strong><em>A note from the P2P.org Solana team</em></strong></p><p><em>Picture the chain you'd design if institutional money was the only client you had to satisfy:</em></p><ul><li><em>Sub-second finality, so on-chain execution sits next to a centralized venue rather than behind it.</em></li><li><em>Tens of thousands of transactions per second at a fraction of a cent, so payments and treasury flows hold up at scale.</em></li><li><em>RWAs and tokenized funds from names your investment committee already knows.</em></li><li><em>A 140+ member bank-and-card consortium choosing it as the home for native issuance of a regulated stablecoin.</em></li><li><em>Mid-single-digit native staking rewards, a mature and separately reportable MEV layer, and unbonding in days rather than weeks, all of it verifiable on-chain down to the position.</em></li></ul><p><em>That isn't a design exercise. It's Solana, live, today. P2P.org has been validating on it since the beginning, and this comes from that inside seat: the case for moving now is stronger than it's been at any point since.</em></p><hr><p>A year ago, institutional delegators were asking whether Solana was reliable enough to process serious capital. Two quarters into 2026, that debate has gone quiet, not because the arguments changed, but because the evidence to support Solana's emergence as a keystone of the Web3 financial ecosystem has become undeniable: Alpenglow has sub-second finality in live testing, MoneyGram is now an active Solana validator, Baillie Gifford has issued a tokenized bond fund natively on the network, and Open USD, a 140+ member consortium including Visa, Mastercard, and BlackRock, chose Solana for native issuance from day one. Meanwhile, reward compression and MEV maturing into a standard, reportable part of the rewards have settled the question of whether the operational lift was worth it.</p><p>Everything above happened in Q2. Taken together, it's not a quiet quarter; it's the foundation the second half of the year gets built on. The real test now isn't whether the network works -&nbsp; It's who you trust to operate on it, and whether you can defend the numbers to a risk committee looking for data it can independently verify, not just take on the operator's word.</p><h2 id="what-the-ecosystem-is-telling-enterprises">What the ecosystem is telling enterprises</h2><p>Regulated products are already live on Solana - At Accelerate in May, State Street and Galaxy launched a tokenized cash fund, and Securitize, Jump, and Jupiter launched regulated tokenized-equity trading. Execution quality is now measured against centralized venues that enterprises already work with.</p><p>Regulated payment players are already testing -&nbsp; South Korea's Toss Bank signed a memorandum of understanding with the Solana Foundation in June to pilot stablecoin-based cross-border remittances for its 15 million customers. It's an early-stage pilot, not a live product yet, but a concrete signal of where a regulated payments player is choosing to run its first test.</p><p>Solana is already being picked as a settlement layer -&nbsp; Open USD picked it for native issuance from day one; when a money-movement consortium this size picks a first chain, treasury and payments flows tend to follow it.</p><p>Latency and finality no longer raise concerns&nbsp; -&nbsp; Alpenglow's move to a live test cluster puts finality on a path from about 12.8 seconds to about 100 to 150 milliseconds, orders of magnitude faster than the T+1/T+2 settlement institutions live with today, and quick enough that settlement stops constraining execution.</p><p>And the last point is, headline rewards don't tell you much anymore - The validator set is consolidating, and network rewards are compressing, so basis points and reward-type mix are what actually separate operators now, not a single APY number.</p><h2 id="the-q2-network-backdrop">The Q2 network backdrop</h2><p>Solana had no network-wide outages in Q2, worth stating plainly, since reliability was the objection a year ago. The staking ratio held steady at about 67%. At the same time, the validator set thinned from about 774 to about 713. Vote fees stayed fixed while total validator rewards compressed, and the broader drop in SOL price added further pressure, together pricing out the smallest operators, so the same stake now sits with fewer, better-resourced operators.</p><h2 id="what-happened-to-rewards-and-why">What happened to rewards, and why</h2><p>None of this is a surprise. Solana's issuance schedule is programmed to decline over time, and Q2's numbers are simply that schedule playing out. Three numbers describe Solana rewards, and they're easy to confuse:</p><p>• The staking rate, the inflation-based reward most people quote, eased from about 5.9 % to about 5.5 % across the network.</p><p>• Total gross rewards, what a validator actually produces once block rewards (base and priority transaction fees) and MEV Jito Tips are added on top, range from about 6.6 % to about 6.1 %.</p><p>• Net of about 3.8 % inflation, real staking rewards hovered at approximately 1.7 to 1.9 %</p><p>The compression numbers also break down cleanly:</p><p>• Base (inflation): around 5.9 % to about 5.5 %. This is the biggest driver, and by design -&nbsp; issuance is programmed down towards a 1.5 % terminal rate, and with roughly two-thirds of supply staked, that shrinking issuance is split across more SOL.</p><p>• Block rewards: about 0.45 percent to about 0.42 percent, a smaller decline, tracking the quarter's lower fee activity.</p><p>• Jito MEV: about 0.10 % to about 0.13 %, the one component that actually grew.</p><p>So the shrinking part of rewards is the programmed, network-wide base, identical for everyone. The variable part is two things. Block rewards - base and priority transaction fees - go to the block producer today (base fees are half-burned; in-protocol sharing of priority fees with stakers, SIMD-123, is expected with Alpenglow). MEV Jito Tips are earned by the validator's work but never sits under its control: tips accumulate in smart-contract-controlled Tip Distribution Accounts (TDA) and are paid out on-chain to stakers' stake accounts (via Jito Tip Router NCN operations), net of the validator's MEV commission. So how much of this layer reaches you depends on the operator only through what it actually controls - whether it runs Jito, and the commission it sets. As the base shrinks by design, that operator-dependent layer is increasingly where returns are won or lost. Whatever gap is left comes down to the operator.</p><h2 id="solanas-biggest-upgrade-yet-is-coming-heres-where-we-stand">Solana's Biggest Upgrade Yet Is Coming. Here's Where We Stand</h2><p>Alpenglow will rewrite Solana's consensus. Sub-second finality, new validator economics, and a faster network are landing over the coming quarters. Operators who've already invested in this infrastructure stand to benefit most from that transition.</p><p>That drop in finality time also opens the door to application categories that a 12.8-second settlement window simply couldn't support: high-frequency DeFi, real-time on-chain gaming, and payments that settle as fast as they're sent.</p><p>P2P.org's Q2 performance is evidence that our validators are already built for what Alpenglow requires. The full P2P.org Solana Staking Performance Snapshot is <a href="http://reports.p2p.org/superset/dashboard/p/ez41xMDNvoE/?ref=p2p.org"><u>published here</u></a>. Operator quality is the differentiator now.</p><p>Across Q2, all three P2P.org public validators beat the network skip rate every month, and gross rewards held above the compressing network baseline, with Jito MEV settling into a stable, reportable share of rewards. The full, auditable breakdown, by validator and reward type, lives on our <a href="http://reports.p2p.org/superset/dashboard/p/nwoQzbO5QEL/?ref=p2p.org"><u>public Gross APY dashboard</u></a>, so any figure can be checked independently rather than taken on trust.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2026/07/data-src-image-25eb0d14-9232-40e3-9ffe-df0e4b890428.png" class="kg-image" alt="" loading="lazy" width="1794" height="514" srcset="https://p2p.org/economy/content/images/size/w600/2026/07/data-src-image-25eb0d14-9232-40e3-9ffe-df0e4b890428.png 600w, https://p2p.org/economy/content/images/size/w1000/2026/07/data-src-image-25eb0d14-9232-40e3-9ffe-df0e4b890428.png 1000w, https://p2p.org/economy/content/images/size/w1600/2026/07/data-src-image-25eb0d14-9232-40e3-9ffe-df0e4b890428.png 1600w, https://p2p.org/economy/content/images/2026/07/data-src-image-25eb0d14-9232-40e3-9ffe-df0e4b890428.png 1794w" sizes="(min-width: 720px) 720px"></figure><h2 id="what-this-means-for-enterprises-and-validators">What this means for enterprises and Validators</h2><p>The binding constraint on institutional Solana today is the allocator's own internal process. On June 30, P2P.org hosted a panel with the Solana Foundation, a global market maker, a European research desk, and a regulated digital asset bank. The friction they named wasn't custody or infrastructure. It was three things:</p><p>Data you can defend - The same on-chain metric can differ by billions depending on methodology; the Foundation itself acknowledges there's no single source of truth.</p><p>Investment mandates - Many of the largest capital pools still can't hold crypto directly. What's moving is the flexible capital: crypto-native funds, family offices, HNW allocators.</p><p>The DeFi compliance line - Native staking is trusted; a liquid-staking layer complicates how frameworks think about systemic risk.</p><p>In practice, the timing depends on internal committees and policy, not on the market.The chain-level objections are closing, so what's actually slowing participation now is internal process. That gives an edge to enterprises that start the internal process now, and to the operator that makes their diligence and reporting straightforward.</p><p>Of the three blockers, data is the one that's actually urgent right now. An allocator can't sign off on a reward number it can't reconcile, and "just trust us" doesn't get past a risk committee.</p><p>This is where running your own data layer stops being a nice-to-have. We built our own on-chain data collectors instead of reselling someone else's feed, so the numbers hold up: the gross APYs methodology is public, and the dashboards break rewards down to each individual stake account going back more than three years. A client can check our performance themselves instead of taking our word for it. Mandates are the allocator's problem to solve; the data is ours, and we've done the work.</p><p>What's changed is that we're not the only ones pushing on it anymore. The Foundation has taken the problem seriously — open-sourcing its data sources and getting providers to reconcile their numbers against each other. For the first time there's a real shot at fixing this across the whole network, not one operator at a time.</p><h2 id="what-else-happened-in-q2">What Else Happened in Q2</h2><h3 id="doublezero-distribution-stops-being-a-penalty">DoubleZero: distribution stops being a penalty</h3><p>Solana's stake used to cluster in Europe, since running a validator elsewhere carried infrastructure complications with little economic upside to offset them. DoubleZero's Phase II delegation program changed that math -&nbsp; it incentivizes operators to move into locations like São Paulo, Singapore, Hong Kong, and Tokyo, making it economically viable for the first time to strengthen decentralization, performance, and validator economics outside the European core. P2P.org was among the first operators onboarded, moving part of its public infrastructure to São Paulo, a region where the network had a real latency gap. Latency was the reason we made the move. The incentive made the move financially worthwhile - and, for the first time, made it economically viable to stand up and test our infrastructure in regions that never penciled out before. Latency gains are still being measured, but the strategic upside is already clear: capacity in these regions is a win for decentralization - and, just as directly, for institutions that operate there and treat in-region validator infrastructure as a selection criterion in its own right (data residency, jurisdiction, latency close to home).</p><h3 id="epoch-based-liquidity-activation">Epoch-based liquidity activation</h3><p>An institutional treasury shouldn't have to wait for a monthly or quarterly reporting cycle to put its staking rewards to work. In Q2, P2P.org rolled out a capability that lets stakers activate staking rewards epoch by epoch, on the network's own close-to-2-day cadence, rather than on a fixed reporting period. For an institution, that means liquidity on demand rather than on a calendar, cleaner reconciliation, and far less dependence on when a reporting window happens to close.</p><h3 id="defi-utility-for-native-stakers-a-category-were-watching">DeFi utility for native stakers, a category we're watching</h3><p>The institutions that delegate to us have grown comfortable with vanilla staking, and the natural next question is what else that stake can do. So far, most stop at the DeFi door. H1's exploits, most at the application layer, made the risk feel unbounded. And the usual on-ramp — a pooled liquid staking token — spreads the delegation across a basket of validators and wraps it in a protocol of its own, a trade many treasuries can't make. We want to give our stakers a way through that door that doesn't ask them to give up native staking to take it.&nbsp;</p><p>The opening is that a staker who's already delegated to us has made the hard decision — it chose an operator. The path we're building reuses that decision instead of replacing it. The same delegation — same validator, still earning — is wrapped by the SPL Single-Validator Stake Pool, a canonical first-party Solana program (three external audits, zero fees, no admin, one vote account per pool, no restaking) into a single-validator staking token whose value accrues with that one validator's rewards. That token is what the staker posts as collateral, in a single venue, to borrow against.&nbsp;</p><p>The smart-contract risk doesn't disappear though — what sits on the book is now a token, not a stake account the client controls directly. But it's a smaller, more legible surface than the pooled-LST route: the stake stays delegated exactly where they chose, the yield is one validator's rewards — no basket to attribute, no restaking layer in between — and the wrapper is a canonical, audited Solana program rather than a governance-heavy protocol. The one genuinely new surface is the lending venue itself: a single venue a risk team can actually clear.</p><p>And it puts the decision back where it belongs — on the operator. Once the position is native stake delegated to a named validator, choosing that validator becomes a credit decision, not a rate comparison. Clearing that bar takes the full operator stack: hardened infrastructure, the automation layered on top, and rewards data resolved to the individual stake account across years of history. That's why the DeFi utility we're watching is a category we can actually help our stakers into.</p><h2 id="solana-staking-for-institutions-a-validator-due-diligence-checklist">Solana Staking for Institutions: A Validator Due Diligence Checklist</h2><p>Institutional allocators evaluating Solana staking tend to weigh the same handful of priorities, (and reward rate usually isn't at the top of the list):</p><p>• Track record and tenure operating validator infrastructure</p><p>• Identity, reputation, and transparency of the node operator</p><p>• SOC 2 Type II attestation</p><p>• Non-custodial architecture and clear segregation of client-controlled assets</p><p>• Reward reporting granularity - consensus rewards separated from MEV and other reward types, for tax and reconciliation purposes</p><p>• Historical skip rate and uptime relative to the network average</p><p>• Transparency and auditability of performance data, including a public, documented methodology</p><p>• Operational resilience -&nbsp; geographic distribution and dedicated network infrastructure</p><h2 id="what-could-lie-ahead%E2%80%A6">What could lie ahead…&nbsp;</h2><p>P2P.org has been validating on Solana since its early days. The commitment to the technology was there from the start, and now that conviction is pointed at internet capital markets, since that's where they're actually forming.</p><p>Two of this year's dominant narratives warrant a more measured assessment. While spot crypto ETFs attracted significant inflows and mainstream attention, relatively little of that capital translated into direct on-chain activity. For many institutional investment committees, ETF exposure has largely satisfied digital asset allocations, reducing the immediate need to engage with blockchain infrastructure directly.</p><p>Tokenization is also frequently overstated as a source of net-new capital. In many cases, tokenized equities and other real-world assets represent existing assets in a new digital wrapper rather than entirely new investment demand. The greater long-term opportunity lies in applications that are only possible on public blockchains, including internet-scale stablecoin settlement, real-time on-chain capital markets, and autonomous, programmable payments. Solana is already at the forefront of these use cases, leading in tokenized equity trading activity and spot DEX volume, with network usage continuing to grow despite weaker market conditions.</p><p>Another milestone is the launch of Alpenglow - it isn't on mainnet yet with live testing still ongoing, but the day it ships, Solana splits into before and after. Sub-second finality closes the latency gap with centralised venues and strengthens Solana's suitability for high performance financial applications. Yet lower latency alone is unlikely to determine institutional adoption.</p><p>As blockchain infrastructure matures, the key constraints are shifting from network performance to operational readiness. Regulatory expectations around on-chain activity continue to evolve, while security has become a critical consideration as AI increases both the sophistication and scale of cyber threats. The concentration of exploits during the first half of the year, largely at the application layer, reinforced how real that risk is across the stack.</p><p>For institutional capital to scale on-chain, infrastructure must satisfy the same standards applied to traditional financial markets: transparent reporting, robust governance, resilient operations, and independently verifiable controls. The competitive advantage will increasingly lie with providers that can demonstrate operational resilience through redundancy, continuous monitoring, incident response, and auditable compliance—not simply high network performance or a promise that nothing will ever go wrong.</p><p>P2P.org has positioned itself around these institutional requirements. Its independent, non-custodial infrastructure and SOC 2 Type II attested reflect a long-term focus on operational resilience at a time when the market for independent infrastructure providers is consolidating. As institutional participation expands, trust in the operators supporting on-chain activity is likely to become as important as the performance of the underlying blockchain itself.</p><h2 id="key-takeaways">Key takeaways</h2><p>For institutional investors, the Solana conversation is no longer centred on whether the network is technically capable. The more important questions are who can be trusted to operate critical infrastructure, how performance is measured, and whether the underlying data can withstand internal governance and regulatory scrutiny. As staking infrastructure matures, operational resilience, transparent reporting, and consistently strong validator performance are becoming the defining differentiators - a set of criteria P2P.org has long measured itself against.</p><blockquote><strong>So whether you're evaluating validator operations for the first time or reassessing an existing validator relationship, </strong><a href="https://www.p2p.org/networks/solana?ref=p2p.org" rel="noreferrer"><strong>talk to us today</strong></a><strong> about institutional-grade Solana staking.</strong></blockquote><p><strong>Disclaimer</strong>: This material is provided for informational purposes only and does not constitute investment, financial, legal, or tax advice. P2P.org accepts no liability for any actions taken based on it. Latency and performance figures referenced are estimates based on internal benchmarks and may vary depending on network conditions, geography, and client infrastructure. Past performance is not indicative of future results.</p>

<p><strong>Series: Hub | Institutional Staking</strong><br><br>The Institutional Staking Hub is <a href="http://p2p.org/?ref=p2p.org">P2P.org</a>'s definitive reference for institutions building proof-of-stake programs. From foundational concepts to infrastructure selection and risk architecture, each article addresses a specific operational or technical dimension that determines how a staking program performs in practice.<br>Previously in the series: <a href="https://p2p.org/economy/liquid-staking-for-institutions/">Liquid Staking for Institutions: A Complete Guide for Funds, Custodians, and Treasury Team</a></p><hr><h2 id="learnings-for-busy-readers">Learnings for Busy Readers</h2><p>What this article covers:</p><ul><li>What restaking for institutions is and how it differs from native and liquid staking</li><li>How actively validated services work and what they mean for institutional capital</li><li>The reward mechanics of restaking and where protocol-generated rewards come from</li><li>The risk categories specific to restaking for institutions</li><li>How liquid restaking tokens work and what they add to the risk profile</li><li>What the operator selection decision means for institutional programs</li><li>A due diligence checklist for evaluating restaking programs</li></ul><p>The core argument: Restaking extends the utility of staked capital by allowing it to simultaneously secure additional protocols beyond the base layer. For institutions, that extension introduces stacked slashing exposure, AVS-level smart contract risk, and operator concentration risk that must be explicitly assessed before any restaking program is designed. Restaking is not a yield enhancement on top of staking. It is a structurally different risk commitment.</p><h2 id="introduction">Introduction</h2><p>Restaking for institutions has moved from an experimental DeFi primitive to a multi-billion dollar infrastructure category in under two years. Restaking protocols reached approximately $18 billion in TVL in 2025, peaking above $20 billion, with institutional flows into restaking strategies increasing alongside regulatory clarity and the yield differential compared with traditional finance. Source: <a href="https://stakin.com/blog/understanding-slashing-in-proof-of-stake-key-risks-for-validators-and-delegators?ref=p2p.org">Stakin</a></p><p>The regulatory environment is developing but restaking sits outside the scope of the March 2026 SEC and CFTC joint interpretation, which explicitly excluded restaking from its covered protocol staking activities. Institutions engaged in restaking should treat their programs as operating in a legally uncertain environment and consult counsel on both securities law and CEA implications. Source: <a href="https://www.gibsondunn.com/sec-issues-interpretive-guidance-on-application-of-federal-securities-laws-to-crypto-assets-and-related-activities/?ref=p2p.org">Gibson Dunn</a></p><p>For custodians, funds, ETF issuers, and treasury teams, the question is now operational: what is restaking exactly, how do actively validated services work, what are the risk categories that are distinct from native and liquid staking, and what does a compliant, institutional-grade restaking program actually require?</p><p>This article answers those questions from the ground up.</p><h2 id="what-restaking-for-institutions-is">What Restaking for Institutions Is</h2><p>In native staking, capital secures a single proof-of-stake network. Staked ETH secures Ethereum. That is its one function. When an institution stakes ETH, it earns the protocol-generated rewards the Ethereum network distributes to validators and delegators. The staked capital does one job.</p><p>Restaking changes that architecture. It allows staked ETH, or liquid staking tokens representing staked ETH, to simultaneously secure additional services built on top of or alongside the base layer. Traditional proof-of-stake staking secures a single network. Restaking extends that security to additional services without requiring new validator sets or fresh capital. Stakers opt in to securing external services and earn additional protocol-generated rewards on top of their base staking rewards, in exchange for accepting additional slashing risk.</p><p>Those external services are called Actively Validated Services, or AVSs. An AVS is any system that needs distributed validation or security: oracle networks, data availability layers, cross-chain bridges, sequencers, and verification services. Each AVS defines its own slashing conditions, its own reward structure, and its own operational requirements for the operators securing it.</p><p>For institutions, restaking is not a passive add-on to an existing staking program. It is a decision to extend capital commitment across multiple slashing surfaces simultaneously, in exchange for additional protocol-generated rewards from each AVS the institution opts into. The risk and reward profile changes materially with each additional AVS.</p><h2 id="how-actively-validated-services-work">How Actively Validated Services Work</h2><p>Understanding AVSs is the prerequisite for evaluating any restaking program. An AVS is a service that uses restaked capital as its economic security layer instead of bootstrapping its own validator set from scratch.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://p2p.org/economy/content/images/2026/07/p2p-restaking-architecture-institutional.jpg" class="kg-image" alt="A three-layer vertical diagram showing the institutional restaking architecture. At the bottom, the Ethereum base layer handles proof-of-stake consensus and base staking rewards. In the middle, the restaking protocol manages stake allocation, operator sets, and slashing enforcement. At the top, three actively validated services, including an oracle network, a data availability layer, and a cross-chain bridge, each receive staked capital and return AVS protocol-generated rewards shown as dashed arrows flowing upward to the institution." loading="lazy" width="1600" height="900" srcset="https://p2p.org/economy/content/images/size/w600/2026/07/p2p-restaking-architecture-institutional.jpg 600w, https://p2p.org/economy/content/images/size/w1000/2026/07/p2p-restaking-architecture-institutional.jpg 1000w, https://p2p.org/economy/content/images/2026/07/p2p-restaking-architecture-institutional.jpg 1600w" sizes="(min-width: 720px) 720px"><figcaption><i><em class="italic" style="white-space: pre-wrap;">The institutional restaking architecture. Staked ETH or LSTs flow from the Ethereum base layer through the restaking protocol into actively validated services, with each AVS generating independent protocol rewards and adding an independent slashing surface.</em></i></figcaption></figure><p>AVSs are the demand side of EigenLayer's security marketplace. An AVS can be a data availability layer, oracle network, bridge, decentralized sequencer, AI verification system, off-chain compute service, or any system that needs distributed validation. Each AVS defines conditions under which an operator's stake can be slashed. If an operator fails to meet those conditions correctly, the AVS can initiate a slashing event against the staked capital backing that operator. Source: <a href="https://www.dlnews.com/research/internal/state-of-defi-2025/?ref=p2p.org">DL News</a></p><p>The institutional implication is that every AVS an institution opts into is an independent slashing surface. Securing one AVS adds one set of slashing conditions on top of the base Ethereum staking slashing conditions. Securing five AVSs adds five independent slashing surfaces, each with its own operational requirements and governance frameworks.</p><p>EigenLayer mitigates correlated slashing exposure with isolated stake allocation, while Symbiotic uses per-vault slashing boundaries to limit how much stake is exposed to any single service. These mechanisms reduce but do not eliminate the compounding slashing exposure that AVS diversification creates.</p><p>For institutional due diligence, each AVS must be evaluated independently: its audit history, its slashing conditions, its governance, its revenue model, and the track record of the operators securing it.</p><h2 id="the-reward-mechanics-of-restaking-for-institutions">The Reward Mechanics of Restaking for Institutions</h2><p>Protocol-generated rewards in a restaking program come from two independent sources. The first is the base layer staking reward: the Ethereum network's protocol-defined reward for validator participation in consensus. The second is the AVS reward: the rewards each AVS distributes to operators and restakers for securing its service.</p><p>The basic restaking reward stack in 2026 looks like this: 3 to 4% from base Ethereum staking, 1 to 2% from EigenLayer AVS rewards, and a variable amount of points or token rewards on top. Total rewards typically land in the 4% to 7% range when paid in protocol-generated rewards, higher when speculative token incentives are included.</p><p>The composition of AVS rewards matters for institutional programs. Rewards denominated in the AVS's own token introduce token price risk and liquidity risk that do not exist in ETH-denominated base staking rewards. Institutions must assess whether AVS reward streams can be received, accounted for, and reported under their applicable accounting and compliance frameworks.</p><p>At present, most restaking infrastructure relies on token incentives rather than distributing actual sustainable protocol-generated yield. Analysts predict that, in the future, strategic AVS selection and active portfolio management will play a central role in optimizing reward outcomes for restaked capital. Source: <a href="https://nftplazas.com/defi-statistics/?ref=p2p.org">NFT Plazas</a></p><p>Network conditions determine protocol-generated rewards and are variable. <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> does not control or set reward rates for base staking or AVS participation.</p><h2 id="the-risk-categories-specific-to-restaking-for-institutions">The Risk Categories Specific to Restaking for Institutions</h2><p>Restaking introduces a risk profile that is structurally more complex than native or liquid staking. Each category requires explicit assessment before any institutional restaking program is designed.</p><h3 id="1-stacked-slashing-risk"><strong>1. Stacked slashing risk</strong></h3><p>Native staking carries one set of slashing conditions: the Ethereum protocol rules governing validator behavior. Restaking adds the slashing conditions of every AVS the institution opts into. One of the most pressing issues for institutional participants is the risk of slashing when assets are delegated across multiple networks simultaneously. Each AVS comes with its own risk profile, and the compounding effect of minor risks across multiple services can result in significant losses for institutional portfolios. The absence of a standardized slashing recovery mechanism further complicates risk management. <a href="https://nftplazas.com/defi-statistics/?ref=p2p.org">NFT Plazas</a></p><p>Slashing events triggered by AVS-level failures can result in permanent loss of a portion of the restaked capital. Institutions must assess the slashing conditions of each AVS in their approved list and model correlated slashing scenarios across their full restaking program.</p><h3 id="2-operator-concentration-risk">2. Operator concentration risk</h3><p>In most restaking architectures, institutions delegate to operators who run the node software required by each AVS. Operator selection determines uptime, rule compliance, and slashing exposure. Delegating to a single operator concentrates risk: that operator could suffer downtime, slashing, insolvency, or regulatory pressure. The same logic that applies at the network level in native staking applies at the operator level in restaking programs if an institution fails to diversify across operators. Source: <a href="https://www.precedenceresearch.com/decentralized-finance-market?ref=p2p.org">Precedence Research</a></p><p>Institutional restaking programs require operator due diligence that mirrors the validator infrastructure evaluation framework for native staking, applied independently to each AVS the institution participates in.</p><h3 id="3-smart-contract-risk">3. Smart contract risk</h3><p>Restaking protocols operate on smart contracts that govern stake allocation, slashing enforcement, and reward distribution. A vulnerability in those contracts can result in loss of capital that is independent of any slashing event. Unique Stake Allocation in EigenLayer isolates slashable stake so the same chunk of capital is not freely exposed to every AVS at once, which helps limit correlated smart contract exposure across the restaking program. However, smart contract risk cannot be eliminated through protocol design alone. <a href="https://rpcfast.com/blog/blockchain-validator-service-providers?ref=p2p.org">RPC Fast</a></p><h3 id="4-avs-revenue-model-risk">4. AVS revenue model risk</h3><p>Most AVSs currently distribute rewards through token incentive programs rather than sustainable fee revenue. The restaking model's core value proposition faces structural headwinds as AVSs struggle to generate sustainable fee revenue. Without meaningful cash flows from secured applications, restaking protocols rely heavily on token emissions, creating inflationary pressure that sophisticated institutions must factor into their reward accounting. Institutions must assess the revenue sustainability of each AVS before committing capital to securing it. Source: <a href="https://p2p.org/economy/validator-due-diligence-framework-what-institutions-really-need-to-evaluate/">P2P.org</a></p><h3 id="5-liquidity-risk"><strong>5. Liquidity risk</strong></h3><p>Restaked capital is subject to unbonding periods at the base layer and, in some architectures, additional lock-up conditions imposed by individual AVSs. The liquidity profile of a restaking program is more complex than native staking and must be explicitly mapped against the institution's redemption obligations and treasury mandates.</p><h3 id="6-regulatory-and-compliance-risk">6. Regulatory and compliance risk</h3><p>The March 2026 SEC and CFTC joint interpretation explicitly excluded restaking from its covered protocol staking activities. Restaking remains legally uncertain at the federal level. AVS reward tokens carry additional classification questions that remain unresolved. Institutions must assess the treatment of each reward token type under their applicable accounting standards and regulatory framework, and consult counsel before deploying capital. Source: <a href="https://static.cahill.com/docs/CahillNXT%20Alert%20-%20Breaking%20Up%20Is%20Hard%20to%20Do%20-%20Howey%20and%20the%20SEC%E2%80%99s%20Crypto%20Asset%20Classification%20Guidance.pdf?ref=p2p.org">Cahill Gordon</a></p><h2 id="how-liquid-restaking-tokens-work">How Liquid Restaking Tokens Work</h2><p>Liquid restaking tokens, or LRTs, extend the same capital efficiency logic that liquid staking tokens introduced to native staking. When an institution restakes ETH or an LST through a liquid restaking protocol, it receives an LRT representing the restaked position. The LRT accrues the rewards of the restaking program and remains transferable and composable.</p><p>LRTs represent a claim on restaked ETH plus accrued rewards, while remaining tradable assets. By combining base staking rewards and AVS reward streams with continued liquidity, liquid restaking tokens allow capital to remain deployable while the underlying position secures multiple protocols simultaneously.</p><p>For institutions, LRTs introduce all of the risk categories that apply to liquid staking tokens: smart contract risk at the LRT protocol layer, depeg risk in secondary markets under stress conditions, and custody and accounting complexity. Those risks compound with the AVS-level slashing and smart contract risks that restaking itself introduces. The cumulative risk stack of an LRT position is materially more complex than either native staking or liquid staking alone.</p><p>In April 2026, Kelp suffered a $292 million exploit that triggered approximately $5.4 billion in withdrawals across the restaking sector. The protocol survived, but the incident reset the risk conversation around the entire liquid restaking token category. This is the risk category that institutions must model carefully before deploying capital into LRT positions.</p><h2 id="the-operator-selection-decision-for-institutional-programs">The Operator Selection Decision for Institutional Programs</h2><p>Operator selection is one of the most consequential decisions in any institutional restaking program. The operator runs the node software required by each AVS, manages the signing infrastructure, and maintains the uptime standards that determine both reward outcomes and slashing exposure.</p><p>When a user restakes, they delegate to an operator who will run the required software for each AVS. The restaker accepts that their stake can be penalized not only for Ethereum-level misconduct, but also if the operator fails to perform correctly for any of the services they choose to secure. Poor performance in one attached service can result in loss on the original stake. Source: <a href="https://www.precedenceresearch.com/decentralized-finance-market?ref=p2p.org">Precedence Research</a></p><p>For institutions, operator evaluation must cover infrastructure architecture, client diversity, key management practices, AVS selection history, slashing record, governance participation policies, and independent certification. These are the same dimensions that apply to native staking validator selection, extended to cover every AVS the operator secures.</p><p>No major slashing event has occurred across any restaking protocol as of mid-2026, but the mechanisms remain largely untested at scale. That absence of historical slashing events should not be treated as evidence of low risk. It reflects the relative youth of the category, not structural safety. Institutional programs must be designed for the slashing scenario, not against the historical average.</p><p><a href="http://p2p.org/?ref=p2p.org">P2P.org</a> supports EigenLayer restaking through non-custodial operator infrastructure, with the same validator-level reporting and operational safeguards that apply to our native staking programs. Client assets remain under the institution's control throughout. Explore our EigenLayer restaking infrastructure at <a href="https://p2p.org/networks/ethereum?ref=p2p.org">p2p.org/networks/ethereum</a>.</p><h3 id="where-restaking-for-institutions-fits-in-a-digital-asset-program">Where Restaking for Institutions Fits in a Digital Asset Program</h3><p>Restaking sits at the intersection of staking infrastructure and DeFi participation. It is not a replacement for native staking. It is an extension that institutions evaluate after establishing a sound native staking foundation.</p><p>Over $58 billion in capital flows through liquid staking protocols, and an additional $18 billion has moved into restaking as of early 2026, according to DefiLlama. In Europe, several ETPs have launched that stake underlying Ethereum holdings to generate protocol-generated rewards for fund holders through familiar regulated structures. Custodial banks and institutional-grade service providers are exploring or entering the restaking market, signaling that the category has evolved from a crypto-native activity toward an institutional infrastructure consideration.</p><p>For institutions with existing ETH staking programs, the restaking evaluation question is whether the additional protocol-generated rewards from AVS participation justify the additional slashing exposure, operational complexity, and compliance requirements that restaking introduces. That is a risk management decision, not a yield optimization decision.</p><p>For institutions building new digital asset programs, the sequencing is clear: establish native staking infrastructure first, evaluate liquid staking as a capital efficiency layer second, and assess restaking as a third layer once the foundation is sound and the risk framework is explicitly designed for the additional exposure restaking creates.</p><p>Building an institutional restaking program? <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> provides non-custodial EigenLayer restaking infrastructure with validator-level reporting and operational safeguards designed for institutional requirements.</p><p>➡️&nbsp; <a href="https://p2p.org/networks/ethereum?ref=p2p.org">Explore P2P.org EigenLayer Restaking</a></p><h2 id="due-diligence-checklist-evaluating-a-restaking-for-institutions-program">Due Diligence Checklist: Evaluating a Restaking for Institutions Program</h2><p>For custodians, hedge funds, ETF issuers, exchanges, treasury teams, infrastructure engineers, staking product managers, and risk committees evaluating or initiating a restaking program, these are the foundational questions to answer before committing capital.</p><h3 id="a-protocol-and-avs-selection">A. Protocol and AVS selection</h3><p>[ ] What is the audit history and code maturity of the restaking protocol?</p><p>[ ] Has each AVS in the approved list been independently assessed for slashing conditions, governance, and revenue model sustainability?</p><p>[ ] Does the restaking protocol use isolated stake allocation or per-vault slashing boundaries to limit correlated exposure?</p><p>[ ] What is the slashing history of the restaking protocol and each AVS in the approved list?</p><h3 id="b-operator-evaluation">B. Operator evaluation</h3><p>[ ] Does the operator run dedicated hardware with geographic redundancy and client diversity?</p><p>[ ] What is the operator's slashing history across all networks and AVSs they secure?</p><p>[ ] How does the operator manage signing keys for AVS participation alongside base layer validator operations?</p><p>[ ] Does the operator hold SOC 2 Type II or equivalent independent certification?</p><h3 id="c-reward-accounting-and-compliance">C. Reward accounting and compliance</h3><p>[ ] Are AVS rewards denominated in ETH, in the AVS's own token, or both?</p><p>[ ] Has your accounting team confirmed the tax treatment of AVS token rewards in your jurisdiction?</p><p>[ ] Does your compliance framework address the regulatory classification of AVS reward tokens applicable to your regulatory status?</p><p>[ ] Can the operator deliver validator-level reward attribution across all AVS reward streams for audit purposes?</p><h3 id="d-risk-management">D. Risk management</h3><p>[ ] Has your risk committee assessed stacked slashing exposure across your full AVS participation list?</p><p>[ ] Are concentration limits defined for exposure to any single AVS or operator?</p><p>[ ] Has your liquidity management framework been updated to reflect unbonding conditions at both the base layer and AVS level?</p><p>[ ] Has smart contract risk been assessed for both the restaking protocol and each AVS in your approved list?</p><h3 id="e-lrt-specific-questions-if-applicable">E. LRT-specific questions (if applicable)</h3><p>[ ] Has the LRT protocol's audit history and code maturity been independently assessed?</p><p>[ ] Does your custody infrastructure support LRT holdings at the token level?</p><p>[ ] Has LRT depeg risk under stress conditions been modeled against your redemption obligations?</p><h2 id="key-takeaway">Key Takeaway</h2><p>Restaking for institutions extends the utility of staked capital by allowing it to simultaneously secure additional services beyond the base proof-of-stake layer. For custodians, hedge funds, ETF issuers, exchanges, and treasury teams, that extension introduces stacked slashing exposure across multiple AVSs, operator concentration risk, AVS-level smart contract risk, and reward accounting complexity that is materially more demanding than native or liquid staking.</p><p>The infrastructure has matured, the regulatory environment has clarified, and institutional capital is moving into the category. The institutions that approach restaking as a risk management decision rather than a reward optimization exercise will be best positioned to build compliant, resilient programs as the category continues to develop.</p><p>Network conditions determine protocol-generated rewards and are variable. <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> does not control or set reward rates for base staking or AVS participation. Slashing risks are protocol-defined and client-borne at both the base layer and AVS level. Operational safeguards are implemented to reduce exposure, but do not eliminate protocol-level risk.</p><h2 id="frequently-asked-questions-faq">Frequently Asked Questions (FAQ)</h2><h3 id="what-is-restaking-for-institutions">What is restaking for institutions?</h3><p>Restaking for institutions is the extension of staked capital beyond a single proof-of-stake network to simultaneously secure additional services called actively validated services. Institutions that restake allow their staked ETH or liquid staking tokens to secure multiple protocols at once, earning protocol-generated rewards from each AVS they opt into in addition to their base layer staking rewards. The extension introduces stacked slashing exposure, operator concentration risk, and AVS-level smart contract risk that must be explicitly assessed before any restaking program is designed.</p><h3 id="how-does-restaking-differ-from-native-and-liquid-staking">How does restaking differ from native and liquid staking?</h3><p>Native staking locks capital to secure a single proof-of-stake network. Liquid staking issues a transferable receipt token at the point of staking, preserving capital flexibility while the underlying asset continues to participate in consensus. Restaking extends staked capital to secure additional services simultaneously, adding AVS-level slashing conditions and reward streams on top of the base layer staking program. Each layer introduces distinct risk categories that compound as the program extends across more AVSs.</p><h3 id="what-is-an-actively-validated-service">What is an actively validated service?</h3><p>An actively validated service is an external system that uses restaked capital as its economic security layer instead of bootstrapping its own validator set. AVSs include oracle networks, data availability layers, cross-chain bridges, decentralized sequencers, and verification services. Each AVS defines its own slashing conditions and reward structure. Institutions opting into an AVS accept those slashing conditions in exchange for the protocol-generated rewards the AVS distributes to operators and restakers.</p><h3 id="what-is-stacked-slashing-risk-in-restaking">What is stacked slashing risk in restaking?</h3><p>Stacked slashing risk is the compounding slashing exposure that results from opting into multiple AVSs simultaneously. Native staking carries one set of slashing conditions at the base layer. Each AVS added to a restaking program adds an independent set of slashing conditions. A slashing event triggered by an AVS-level failure can result in permanent loss of a portion of the restaked capital, independent of the institution's base layer staking performance. Institutions must assess the slashing conditions of each AVS independently and model correlated slashing scenarios across their full restaking program.</p><h3 id="what-is-a-liquid-restaking-token">What is a liquid restaking token?</h3><p>A liquid restaking token is a receipt token issued by a liquid restaking protocol when an institution restakes ETH or an LST. It represents the restaked position, accrues the rewards of the restaking program, and remains transferable and composable. LRTs extend the capital efficiency logic of liquid staking tokens to the restaking layer, but compound the risk profile: smart contract risk at the LRT protocol layer and depeg risk in secondary markets stack on top of the AVS-level slashing, and smart contract risks that restaking itself introduces.</p><h3 id="how-should-institutions-approach-operator-selection-in-restaking-programs">How should institutions approach operator selection in restaking programs?</h3><p>Operator selection determines uptime, AVS rule compliance, and slashing exposure across the restaking program. Institutions must evaluate operators across infrastructure architecture, client diversity, key management practices, AVS selection history, slashing record, governance participation policies, and independent certification such as SOC 2 Type II. The operator evaluation must be applied independently to each AVS the operator secures, not assessed once at the program level. Diversification across operators reduces concentration risk that would otherwise compound the existing AVS-level exposure.</p><h3 id="what-does-the-march-2026-regulatory-interpretation-mean-for-institutional-restaking">What does the March 2026 regulatory interpretation mean for institutional restaking?</h3><p>The March 2026 SEC and CFTC joint interpretation explicitly excluded restaking from its covered protocol staking activities. Restaking remains legally uncertain at the federal level, and neither the SEC nor the CFTC has issued specific guidance on it to date. Institutions engaged in restaking should treat their programs as operating outside the scope of the March 2026 interpretation and consult counsel regarding both securities law and CEA implications before allocating capital.</p><hr><p><strong>About </strong><a href="http://p2p.org/?ref=p2p.org"><strong>P2P.org</strong></a></p><p>Founded in 2018, <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> helps institutional capital protect digital asset yield across non-custodial staking infrastructure and curated DeFi strategies. With over $10B in assets secured and operating on 40+ proof-of-stake networks, <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> maintains a zero-slashing-incident track record, is trusted by over 190 institutional clients and is SOC 2 Type II attested. To explore how <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> can support your institution's staking or DeFi infrastructure needs, <a href="https://p2p.org/contact?ref=p2p.org">get in touch with our team</a>.</p><hr><p><strong>Disclaimer</strong></p><p>This material is provided for informational purposes only and does not constitute investment, financial, legal, or tax advice. <a href="http://p2p.org/?ref=p2p.org">P2P.org</a> accepts no liability for any actions taken based on it. Latency and performance figures referenced are estimates based on internal benchmarks and may vary depending on network conditions, geography, and client infrastructure. Past performance is not indicative of future results.</p>